Friday, June 9

Bank of England says it is on alert after turmoil in banking sector

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LONDON, March 28 (Reuters) –

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Top Bank of England officials said on Tuesday the central bank was on alert amid global turmoil in the banking sector but they also said Britain was not experiencing stress linked to the demise of Silicon Valley Bank and Credit Suisse.

“I don’t think that any, and we’ve said this, that any of these features cause stress in the UK banking system,” BoE Governor Andrew Bailey told parliament’s Treasury Committee.

“We are in a period in very heightened, frankly, tension and alertness.”

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Markets have been roiled in recent weeks by the collapse of US technology lender Silicon Valley Bank, followed by the failures of other US regional lenders and the emergency rescue of historic Swiss lender Credit Suisse by rival UBS.

“This is why we have to remain incredibly vigorous,” Deputy BoE Governor Dave Ramsden said. “We’ll keep a close eye on bank funding costs, what the consequences of those could be for households and businesses, equally looking out for other risk factors, we have to remain incredibly vigorous.”

Bailey said the recent swings in the share prices of some banks showed investors were testing the sector.

“I think there are moves in markets to, if you like, test out firms,” Bailey said.

The failure of SVB had been one of the swiftest he had seen, he added.

“The fastest passage from sort of health to death, really, since Barings actually,” Bailey said, referring to the failure of British investment bank Barings Plc in 1995. (Reporting by Iain Withers and Sarah Young Editing by William Schomberg)